How to Manage ERP Employee Training Costs

Studying employee training costs is one of the most important considerations when putting together an employee ERP training program. Not only are such costs necessary for maintaining the viability of personnel training, studying them also helps executives and managers appreciate what sort of goals and rewards they can expect from such investments.

However, because of the substantial amount of money represented by such costs, monitoring and managing such costs is not always easy. Employee training has always been an unpredictable process, which is why it’s always important to approach such an issue with careful consideration. So if you need help managing your organization’s employee training costs then here are several tips to help you along the way.

Managing Employee Training Costs

1. Calculate Your Employee Training Costs

Before you can start to manage the costs of employee training, you will need precise data on all the relevant factors. To do this, you will need to consult with several specialists, including Accountants, Human Resource Personnel, Administrative Personnel, Managers, Educational Contractors and anyone else who may be needed for the employee training program. You can ask these specialists for projections, advice and even actual data on how to best manage your company’s employee training expenditures.

After your organization have consulted all the necessary specialists, the actual calculation process may begin. Calculating the cost of training involves all kinds of factors. Several good examples include:

Course Materials

Teaching and facilitator fees

Videos and workbooks

Rental fees for equipment and facilities

License fees

Videoconferencing costs

Specialized hardware costs

Administrative costs

If your organization perceives other factors that may affect its employee training costs then it should include them into the computation process as well. Employee training varies from organization to organization, and such variations need to be taken into account when computing the potential costs and rewards of such a long term project.

Once all of the necessary factors have been tallied, the next step is to measure the potential costs and saving in the employee training program once it has been implemented. For example, let’s say that your company loses about $10,000 annually due to poor personnel performance then your organization will need to calculate how your newly trained employees can help to reduce this amount. If their improved performance helps to negate such loses by a wide margin then such an improvement may be considered a net gain.

Aside from the potential gains, it’s also important that you calculate the potential loses that may arise from your newly trained personnel. For example, there are situations where companies are forced to restructure their entire hierarchy in order to accommodate their newly trained personnel or acquire new equipment for their use.

Once all of this information has been calculated, you’ll have a much better control over your organization’s employee training costs. Furthermore, by calculating such costs, your organization will be able to better predict the outcome of future training courses.

2. Establish A Competitive Learning Strategy

Once your organization has all of the necessary information, the next step will be to create a competitive strategy for your training program. This strategy should be primarily concerned about implementation, but it can also deal with other issues, such as training reviews and performance analysis. Furthermore, it can also handle other topics, like learning strategies, employee engagement and teaching resources.

The value of establishing a learning strategy is that it can help your organization focus its resources, correct mistakes in your employee training programs and implement long term goals for trainees to aspire to. For example, if your organization requires personnel who can handle new hardware, then it will need a learning strategy which focuses on the development of technical skills and other related subjects. Not only can such a strategy help your organization avoid unnecessary spending, it will also give all the trainers and facilitators a general idea of what your organization seeks to accomplish with its employee training programs.

Finally, it’s worth mentioning that a good learning strategy should also use different types of learning methods. Whether it’s remote learning or conventional classroom learning methods, a competitive long term learning strategy should adopt all the necessary teaching methods in order to lower your organization’s training costs, while optimizing its long term results.

3. Establish Desirable Variable Skill Sets

After you have set up your organization’s learning strategy, the next step is to determine what sort of skills you want your trainees to learn during their training process. Different positions demand different skills, and consequently, different costs of training, which is why it’s important to emphasize precisely what kind of skills you want your trainees to develop as soon as possible. Unnecessary or obsolete skill sets aren’t just a waste of resources, they also represent a net loss for your organization.

One good example is the difference between warehouse staff and system admins. Training the former generally costs less time and money than training the latter (which usually takes weeks to finish). Furthermore, it’s also worth mentioning that training system admins require specialized facilities and hardware, whereas warehouse personnel may be taught in a simple classroom-like facility using routine methods.

The important point to remember here is that in order to effectively manage your company’s training costs, you will need to specialize its training policies in order to prioritize those skills which your company requires. Although most companies require personnel who have a wide range of skill sets, there is such a thing a prioritized requirements, and prioritizing certain aspects of your company’s training strategy will allow it to cut down some of its costs.

Conclusion

Explicitly defining these skills which are needed in your organization will allow your organization to better manage its employee training costs. Of course, there’s no precise way to manage an organization’s employee training programs, but even a general guideline, like the three items mentioned here, can go a long way in reducing any organization’s employee training expenditures, which in turn leads to more personnel development opportunities. So in managing your company’s employee training costs, remember that what matters most is the bigger picture.

Marissa Hart is the Lead Author & Editor of ERPeople. ERPeople is a blog focused on all Enterprise Resource Planning business management platforms. ERP can be used by a company to collect, store, manage, and interpret data from many business activities, including: Product planning, cost, manufacturing or service delivery, marketing, and sales.